1. Time for Change: The Hidden Cost of a Fragmented Health Insurance System Karen Davis President, The Commonwealth Fund Testimony to the Senate Aging Committee March 10, 2003

2. Growth in the Number of Uninsured, 1953–2001 Source: 1953–1976, National Health Interview Survey; 1980, EBRI; 1990–2001 Current Population Survey Number of uninsured, in millions 1

3. Primary Source of Health Insurance, 2001 Individual coverage 5% Employer-based coverage 57% Source: Commonwealth Fund Task Force on the Future of Health Insurance analysis of March 2002 Current Population Survey Uninsured 15% Medicaid 8% Employers Paid $335 Billion in Premiums Medicare 13% Military 1% 2

4. Sources Health Insurance by Poverty Level, 2001 Source: Commonwealth Fund Task Force on the Future of Health Insurance analysis of March 2002 Current Population Survey 3

5. One of Four People Under 65 With Time Uninsured During 2000 62 Million People Insured all year 74.1% Total Population Under 65 = 241 Million Source: MEPS Statistical Brief #6 - The Uninsured in America, 1996–2001. Civilian Noninstitutionalized Population Under Age 65, Nov. 2002 Uninsured part year 12.6% Uninsured all year 13.3% 4

6. Percent Uninsured by Age Group and Length of Time Uninsured Source: Commonwealth Fund Task Force on the Future of Health Insurance analysis of March 2000 Medical Expenditure Panel Survey 26 23 47 41 29 22 18 % 5

7. Insurance Sources for Young Adults, Ages 19–23 Source: Commonwealth Fund Task Force on the Future of Health Insurance analysis of March 2002 Current Population Survey Not full-time students 12.5 million Full-time students 7.1 million Uninsured 36% Other Coverage 19% Other Coverage 27% Uninsured 18% Employer- Dependent 17% Employer- Dependent 48% Employer 28% Employer 7% 6

8. Nearly One-Half of Hispanics Uninsured During the Year 25 21 46 49 Percent ages19 – 64 uninsured 55 35 Source: Michelle M. Doty, Hispanic Patients Double Burden: Lack of Health Insurance and Limited English. The Commonwealth Fund, February 2003. 7

9. Uninsured Workers: Reasons for Lack of Insurance Coverage, Ages 19–64 Source: S. Collins, et al., On the Edge: The Health Insurance Coverage of Low-Wage Workers Findings from the 2001Commonwealth Fund Health Insurance Survey. The Commonwealth Fund, forthcoming. 8

10. Medium to Large Employer (=>25 Employees) Workers who are Offered, Eligible, and Participate in own Employer Health Plan, by Firm Size and Wage, All Workers, 19–64 Small Employer (<25 Employees) Percent *Difference by wage significant at p<.0001 * * 9 Source: S. Collins, et al., On the Edge: The Health Insurance Coverage of Low-Wage Workers Findings from the 2001Commonwealth Fund Health Insurance Survey. The Commonwealth Fund, forthcoming.

11. Percent Uninsured Now or During Past Year, by Work Status Percent of adults 19 – 64 Source: L. Duchon, et al. Security Matters: How Instability in Health Insurance Puts U.S. Workers at Risk. The Commonwealth Fund, December 2001. 10

12. Percentage of Firms Offering Retiree Health Benefits, 1988–2001 Source: The 2003 CMS Chart Series (Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1991, 1993, 1995) All Small Firms (3–199 Workers) All Large Firms (200+ Workers) 11

13. Medicare Beneficiaries With Drug Coverage by Primary Source of Supplemental Coverage, 1995 and 1999 Note: Data are based on the non-institutionalized beneficiaries. Percentages shown in bars are Medicare beneficiaries with drug coverage as a percent of total Medicare beneficiaries. Beneficiaries do not necessarily get drug coverage from their primary sources of supplemental insurance. Source: The 2003 CMS Chart Series (CMS/Office of Research, Development and Information. Data are from the Medicare Current Beneficiary Survey). 65% of Medicare Beneficiaries Have Drug Coverage 76% of Medicare Beneficiaries Have Drug Coverage Medicare + Choice Plans Medicaid Employer- Sponsored Individually Purchased Other 12

14. Percent of Non-Elderly Population Uninsured by State, 1999-2000 Source: R. Mills, U.S. Census Bureau, Current Population Reports, P60-220, Health Insurance Coverage: 2001, 2002. Uninsured rates are three-year averages, 1999-2001. 17% or more 14 – 16% 11 – 13% 10% or less Population without health insurance 13

15. Medicaid Beneficiaries by Eligibility Group, 1975–2001 *Note: (1) In 1998, a large increase occurred in the number of persons served, mainly the result of a new reporting methodology of classifying payments to managed care organizations; FY 1998 was the first year capitation payments were counted as a service for purposes of the HCFA 2082 reporting, and thus all managed care enrollees were counted as individuals receiving services. This new methodology probably has the greatest effect on the reported number of children; (2) the term adults as used above refers to nonelderly, nondisabled adults; (3) disabled children are included in the blind & disabled category shown above. **The Other category was dropped in 1999. Source: The 2003 CMS Chart Series (CMS, CMSO, Medicaid Statistical Information System.) 2001 Total = 46.1 million Adults 10.4 million Children Under 21 23.1 million Blind & Disabled 7.9 million Age 65 & Older 4.8 million 14

16. 28.8% to 33.9% More than 41.3% 34.0% to 41.3% Less than 28.8% Births Financed by Medicaid as a Percent of Total Births by State, 1998 Note: CO, GA 1997 data; KY, NJ, VT 1996 data. Source: The 2003 CMS Chart Series (Maternal and Child Health (MCH) Update: States Have Expanded Eligibility and Increased Access to Health Care for Pregnant Women and Children, National Governors Association, February, 2001, Table 23, at http://www.nga.org.) WA OR ID MTND WY NV CA UT AZ NM KS NE MN MO WI TX IA IL IN AR LA AL SC TN NC KY FL VA OH MI WV PA NY AK MD ME VT NH MA RI CT DE DC HI No data CO GA MS OK NJ SD 15

17. Deaths of Adults Ages 25 – 64, 1999 1.Cancer – 156,485 2.Heart disease – 115, 827 3.Injuries – 46,045 4.Suicide – 19,549 5.Cerebrovascular disease – 18,369 6.Uninsured – 18,000 7.Diabetes – 16,156 8.Respiratory disease – 15,809 9.Chronic liver disease and cirrhosis – 15,714 10.HIV/AIDS – 14,017 Sources: U.S. Department of Health and Human Services, National Center for Health Statistics, Health, United States, 2002, Table 33, p. 132 – deaths for causes other than uninsured; Institute of Medicine, Care Without Coverage, Appendix D, p. 162, deaths attributable to higher risks of uninsured adults 25–54. 16

18. Uninsured at Risk for Access and Medical Bill Problems Percent of adults 19 – 64 *Adult said he or she did not go to the doctor when needed, did not fill a prescription, did not follow up on recommended tests or treatment, or did not see a specialist due to costs ** Adult said he or she not able to pay medical bills, has been contacted by collection agency, or had to change way of life to pay bills Source: The Commonwealth Fund 2001 Health Insurance Survey 17

19. Uninsured at Risk for Low-Quality Medical Care *Among women 50–64. **Among adults 45–64. Source: J. Ayanian, et al. Unmet Health Needs of Uninsured Adults in the United States, JAMA 284 no 16 (2000): pp 2061–2069. 18

20. National Health Expenditures, 1988–2012 Trillions *Projected Source: Heffler et al., Health Spending Projections for 2002–2012, Health Affairs (February 7, 2003). 19

21. *Projected Source: Heffler et al., Health Spending Projections for 2002–2012, Health Affairs (February 7, 2003). National Health Expenditures as Percent of GDP, 1988–2012 20

22. Source: Gabel et al., Job-Based Health Benefits in 2002: Some Important Trends, Health Affairs (Sept/Oct 2002): 143–151. Percent Change in Health Insurance Premiums and Workers Earnings from Previous Year, 1988–2002 21

23. Sources of Government Funding Available for Uncompensated Care of the Uninsured, in Billions of 2001 Dollars Source: J. Hadley and J. Holahan, How Much Medical Care Do the Uninsured Use, and Who Pays for It? Health Affairs Web Exclusive February 12, 2003. $30.6 Total 22

24. Projected Annual Medicaid Prescription Drug Expenditures Per Dual Eligible With Full Medicaid Benefits, 2002 (In Dollars) U.S. Average States spend $6.8 billion on prescription drugs for dual-eligible beneficiaries Source: J. Verdier and S. Dale, State Medicaid Prescription Drug Expenditures for Medicare-Medicaid Dual Eligibles (New York: The Commonwealth Fund, forthcoming. 23

25. Uncompensated Care* as a Percentage of Gross Patient Revenues, by Ownership and Type of Hospital, 1996 *Bad debt plus charity care **Includes minor teaching and non-teaching hospitals Source: Commonwealth Fund Task Force on Academic Health Centers. A Shared Responsibility: Academic Health Centers and the Provision of Care to the Poor and Uninsured, The Commonwealth Fund, April 2001. % 24

26. Percentage of Community Health Center Medical Directors Who Report That Additional Care Can Be Provided For Their Patients Very Frequently or Frequently Percent of physicians Source: M. Gusmano, G. Fairbrother, and H. Park, Exploring the Limits of the Safety Net: Community Health Centers and Care for the Uninsured. Health Affairs (November/December 2002) 188–193. 25

27. Comparing Annual Premiums for Single Coverage: Employer-Sponsored PPOs vs. Individual Insurance, by Market Area Metro AreaAverage Group Premium Individual Insurance Premium for Males Age 55 Individual Insurance Premium for Females Age 55 Individual Insurance Premium for Males Age 27 Individual Insurance Premium for Females Age 27 Providence-Fall River-Warwick, RI/MA $2940$6480$6456$2256$2880 Los Angeles- Long Beach, CA 27369528950433244788 Rural Texas24366660664823283348 Chicago, IL26883336338410201284 Greensboro, NC* 27123900388813681716 Median27366120610821362880 * Group insurance data presented for Greensboro were based on averages for the state of North Carolina Source: J. Gabel, K. Dhont, and J. Pickreign, Are Tax Credits Alone the Solution to Affordable Health Insurance? The Commonwealth Fund, May 2002. 26

28. Administrative Cost as Percent of Benefits, Various Programs, 1991 Source: Committee on Ways and Means, U.S. House of Representatives. Health Care Resource Book. U.S. Government Printing Office, Washington:1993 % 27

29. Reduction in the Number of Uninsured Over the Course of a Year Source: Leighton Ku and Donna Cohen Ross, Staying Covered: The Importance of Retaining Health Insurance for Low-Income Families. The Commonwealth Fund, December 2002. Percent reduction in uninsurance if everyone with coverage retained it during the year 28

30. *Projected Source: Levit et al., Trends in U.S. Health Care Spending, 2001, Health Affairs (January/February 2003): 154–164 and Heffler et al., Health Spending Projections for 2002–2012, Health Affairs (February 7, 2003). Government Program Administration and Net Cost of Private Health Insurance, in billions 1970–2012 Billions 29

31. Regular Doctor, by Insurance Status adults 18–64 *p<.001 (differs significantly from insured population) Source: The Commonwealth Fund 2001 Health Care Quality Survey Same doctor for more than 5 years 20% No regular doctor 46% Same doctor for less than 5 years 34% No regular doctor 18% Same doctor for less than 5 years 47% Same doctor for more than 5 years 35% Uninsured (full or part-year)*Insured 30

32. The rich CATEGORIES OF PEOPLE IN THE U.S. HEALTH INSURANCE SYSTEM The poor The near poor The broad middle class The Young Working- age people People age 65 and over The 40 million or so uninsured tend to be near poor The federal-state Medicaid program for certain of the poor, the blind and the disabled The employed and their families who are typically covered through their jobs, although many small employers do not provide coverage. For the rich, Disneyland the sky-is- the limit policies without rationing of any sort (Boutique medicine) Near poor children may be temporarily covered by Medicaid and S-Chip, although 7-10 million are still uninsured. Persons over age 65, who are covered by the federal Medicare program, but not for drugs or long-term care. Often the elderly have private supplemental MediGap insurance The very poor elderly are also covered by Medicaid QUIMBIESSLIMBIES Source: Professor Uwe Reinhardt, Princeton University 31

33. 2001 Premium and Selected Benefit Copayments: Tampa Medicare+Choice Plans Chart 32 Plan V 1 Plan V 2 Plan WPlan X 1 Plan X 2 Plan YPlan Z 1 Plan Z 2 Enrollment limitNo YesNo Yes Premium$63$0$63$179$0 $19 Doctor visits:Primary care Specialist $10 $5–$200 $15 $15–$400 $10 $25 $10 $15 $10 $15 $20 $10 $15 $5 $10 Outpatient visits:Ambulatory surgery Hospital visit $200 $500 $0 $50 $35 $50 $100 $50 $25 Durable medical equipment$0 20%$0 Diagnostic tests:Clinical lab X-rays/diagnostic lab $0 $40–$200 $0 $40–$350 $0 $5 $5 X-ray; $50 other radiation services $0 Radiation therapy$40/visit $0 $5–$50$15/service$10/service Outpatient rehabilitation services$40/visit $25/visit$10–$15/visit $25/visit$15/visit$10/visit Inpatient hospital care$500 per admiss.; $200/day for days 7–30 at network hospital $150/day$100/stay$300/stay$150/day$200/stay$0 Skilled nursing facility:Days 1–20 Days 21–100 $0/day $85/day $0/day $90/day $0 $97 $0 $75 $0 Home health care$0 Bone mass measurement$10/physicians office, $40 non- physician clinic $15/physicians office, $40/non- physician clinic $0 Prescription drugs Formulary drugs 30–31-day supply Generic copay Brand copay 90-day mail order Generic copay Brand copay Cap Generic Brand Non-formulary 30–31-day supply Generic copay Brand copay 90-day mail order Generic copay Brand copay Cap $10 $20 preferred $20 $40 preferred $150/3 months generic and preferred & non- preferred brand $10 $40 $10 $80 See above No prescription drug coverage $5 $20 $15 $60 Unlimited $250/6 month formulary & non- formulary brand $35 $105 See above $5 $15 $45 Unlimited $50/month formulary & non- formulary brand $30 $90 See above $10 Not covered $30 Not covered Unlimited Not covered $8 $40 $24 $120 $500/year Plan has no formulary (31-day) $7 $20 Not available Unlimited $125/3 months non-formulary generic & all brand drugs $30 Not available See above (31-day) $5 $15 Not available Unlimited $125/3 months non-formulary generic & all brand drugs $30 Not available See above a Plan Y has a $3,500 out-of-pocket limit protection for combined inpatient and outpatient services, not including certain office visit copays, prescription drugs, medical supplies, and selected other benefits. b $40 specialist per visit copay, except $10/visit to Allergy physicians, $5/specimen to hospital pathologists, $5/interpretation to hospital radiologists, $50/visit to ER physician, $200 for cataract surgery, $50/each allergy skin testing, and 40% of charges for non-plan second medical opinion. c $50 specialist per visit copay, except $15/visit to Allergy physicians, $15/specimen to all hospital pathologists, $15/interpretation to hospital radiologists, $50/ visit to ER physicians, $400 for cataract surgery, and 50% of charges for non-plan second medical opinion. d $200 copay for complex procedures, defined as Cardiac Catheterization, MRI, Lithotripsy, Nuclear Stress Test, CAT Scan, and PET Scan; $40 copay for all other simple diagnostic testing procedures; and $50 copay for allergy skin testing. e $350 copay for complex procedures, defined as Cardiac Catheterization, MRI, Lithotripsy, Nuclear Stress Test, CAT Scan, and PET Scan; $40 copayment for all other simple diagnostic testing procedures; and $50 copay for allergy skin testing. f $1,000 per admission and $200/day for days 7-30 at non-participating hospitals. g $1,000 per admission and $300/day for days 7-30 at non-participating hospitals. h Glucose monitors, test strips, lancets, and self-management training. Source: G. Dallek and C. Edwards, Restoring Choice to Medicare + Choice: The Importance of Standardizing Health Plan Benefit Packages (New York: The Commonwealth Fund, October 2001).